Food delivery service Deliveroo surges following $3.6B proposed takeover offer from DoorDash

Category: Business

Listening

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Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. buyback / ˈbaɪˌbæk / (n.) – an arrangement in which owners of a business sell their shares and then buy them again according to an agreement
    Example:

    The company announced a buyback of its own shares to increase its value.


  2. buyout / ˈbaɪˌaʊt / (n.) – a situation in which one company buys enough shares of another company to take control of it
    Example:

    The small company grew fast after a buyout by a large international business.


  3. stake / steɪk / (n.) – the part or share someone has or owns in a company
    Example:

    He didn’t want to stay involved in the business, so he sold his stake to his partners.


  4. expansion / ɪkˈspæn ʃən / (n.) – the act of becoming bigger or larger
    Example:

    The new budget will support the expansion of internet services in rural areas.


  5. criteria / kraɪˈtɪər i ə / (n.) – rules or standards that help someone judge or decide on something
    Example:

    The partnership was canceled because the company failed to meet the other company’s criteria.


Article

Read the text below.

Shares of Deliveroo, the food delivery service based in London, are hitting three-year highs after it received a $3.6 billion proposed takeover offer from DoorDash. Deliveroo announced the bid after markets closed in Europe. The company also said that it was suspending a $133.5 million share buyback it had announced last March.


Deliveroo said that its board has informed DoorDash that if a firm offer is made at the financial terms provided, it will recommend the bid to its shareholders. Deliveroo added that its board has decided to engage in talks with DoorDash about the possible offer and has given the company access to due diligence. Deliveroo said DoorDash was expected to decide by May 23 whether it planned to make a firm buyout offer or not.


The proposed deal comes a few months after technology investment company Prosus agreed to buy food delivery giant Just Eat Takeaway.com for 4.1 billion euros ($4.29 billion). Acquiring Just Eat Takeaway.com will boost Prosus’s food delivery portfolio in Europe, a move that DoorDash is also looking to make.


DoorDash currently runs its business in the U.S., Canada, New Zealand and Australia.


Deliveroo, which was founded in 2013, operates in ten markets worldwide, including the U.K., Italy and France. The company reported its first annual profit last year.


In January 2024, Delivery Hero sold its minority stake in Deliveroo after holding it for less than three years. The two companies worked together earlier this year, with Delivery Hero buying some of Deliveroo’s Hong Kong assets after the company decided to exit that market.


Ronald Josey of Citi Investment Research can see a few reasons why DoorDash is interested in Deliveroo. “While we continue to believe that DoorDash is more focused on organic expansion, Deliveroo meets several of DoorDash’s merger and acquisition criteria, including expanding geographies and total addressable market, whereby it would take DoorDash time to do organically while delivering long-term free cash flow,” he wrote.


Shares of Deliveroo jumped more than 17% on the London Stock Exchange.


This article was provided by The Associated Press.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • DoorDash, a food delivery company from the U.S., is trying to expand by buying Deliveroo, a company based in the U.K. If you owned a business, would you prefer to grow it slowly on your own or join with another business to grow faster? Why? Discuss.
  • Imagine a small business in your community that you like is being bought by a big company. Do you think this is a good thing or a bad thing? Why do you say so? Discuss.

Discussion B

  • DoorDash and Deliveroo are both expanding internationally, not just staying in their home countries. Do you think companies should grow internationally or stay in their home countries? Why do you think so? How do you think international companies in your country affect local businesses? Discuss.
  • If you owned a successful business in your country, would you want to expand to other countries? Why or why not? What challenges do you think you might face (ex. language, different customer habits)? Discuss.